Pre-deposit waiver under machine sealing rules granted where closure allegation lacked proof and officers controlled the sealing process.

In a dispute under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, the assessee established a prima facie case for waiver of pre-deposit because the allegation of gutka clearance during factory closure was unsupported by invoices or other record. The panchnama showed that officers deplugged the machines and sealed the hall and factory entrance, indicating that the machines were rendered inoperative. On a prima facie reading of the Rules, the assessee's duty was to intimate the intended closure, while sealing was to be carried out by departmental officers; any failure by officers to seal properly could not be attributed to the assessee absent collusion. Waiver of pre-deposit of duty and interest was granted subject to a bond.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit in a dispute concerning alleged non-compliance with the sealing requirements under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.

Analysis: The show cause notice alleged clearance of gutka during the period of factory closure, but no invoices or supporting material were placed on record to substantiate that allegation. The panchnama showed that the excise officers deplugged the machines, kept them in a hall, and locked and sealed both the hall and the factory entrance, indicating that the machines were rendered inoperative. On a prima facie reading of the Rules, the assessee's obligation was to intimate the intended closure, while the sealing process was to be carried out by the departmental officers. If the departmental officers did not effect sealing in the manner expected under the Rules, that lapse could not be visited upon the assessee in the absence of any allegation of collusion.

Conclusion: The appellant was held to have established a prima facie case and was granted waiver of pre-deposit of duty and interest, subject to furnishing of a bond.

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